Russia and coal

According to U.S. Energy Information Administration statistics, Russia produced 321 million short tons of coal in 2006 (roughly a quarter of U.S. coal production), making it the fifth largest in the world. The country consumed roughly 260 million short tons, leaving 61 million short tons for export. According to the government's energy strategy, Russia should produce between 441 and 496 million short tons by 2020. Almost 80 percent of domestic coal production comes from independent producers.

Russian coal production began a three-year upswing in 1999, part of the Russian government’s strategy to increase coal production and build more coal-fired plants to reduce demand for natural gas, so that the country can export more natural gas. As of September 2010, there is currently a proposal to reduce the excise duty on coal production by 50 percent. This would also involve a tax system with diversified rates designed to replace gas with coal at power stations and reduce gas consumption.

Russia exports to China
In 2009, Russia exported 12.09 million tonnes of coal to China, up 1,500% over 2008. During the first half of 2010, Russia exported 6 million tonnes of coal to China, making it currently the fourth-largest coal exporter to China. Russia plans to increase annual coal exports to China to 15 million tonnes for the next five years, then increase exports to 20 million tonnes per year for the next 20 years. In addition to securing markets between the two countries, the trade agreements provide for the joint-ventured development of the Ogodzhinskoye coal deposit in the Amur region in Russia's Far East, which borders China.

September 2010: Coal deal reached with China
In September 2010, it was announced that Russia had agreed to supply China with 475 million tonnes of coal over the next 25 years. In the deal, China will provide Russia with a $6 billion loan to finance the development of several coal projects into large-scale mines. The announcement followed a conference on energy cooperation in Blagoveshchensk, attended by Sergei Shmatko, Russia's energy minister, and Zhang Guobao, director of China's National Energy Administration. The Russian ministry stated: "Agreements have been reached on supplies of at least 15 million tonnes of [Russian] coal to China over the next five years and at least 20 million tonnes per year afterward. China's $6 billion loan will be secured by the Russian coal exports. The money will be used for everything from mine development and construction to the building and expansion of transportation infrastructure."

Russia and China also agreed to conduct a preliminary feasibility study to set up another joint-venture for the development of a coal-to-liquids project in Russia.

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